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Star Power?

Casting doubt on standard assumptions about business success.

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This story appears in the April 2007 issue of Entrepreneur. Subscribe »

If you dream of styling your company after, say, Dell Inc. and experiencing Michael-like glory, say hello to the Halo Effect. This potentially dangerous delusion frequently occurs when we attribute a company's success to its visionary leadership, superb corporate culture or other attribute, says Phil Rosenzweig, author of The Halo Effect (Free Press, $25). In fact, Rosenzweig maintains, it's equally if not more likely that we consider a company's leaders visionary and its culture top-notch because of its success, not the other way around.

Rosenzweig, a professor at Switzerland's International Institute for Management Development, considers just about all writing on business seriously defective. The near-ubiquitous Halo Effect is frequently joined by errors such as the Delusion of Lasting Success, which holds that companies can achieve continuing success when, in fact, most front-runners eventually slide back to the middle of the pack. The questions Rosenzweig raises about entrepreneurial superstardom don't have good answers, but the issues themselves are illuminating.

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